Asian FX, stocks fall as China data fails to lift markets, yuan drags

The Malaysian ringgit led losses among Asian currencies and share markets on Monday, as lacklustre Chinese economic growth data pointing towards a faltering global momentum and prospects of more US interest rate hikes dampened risk appetite.

The ringgit and Chinese yuan were among the major laggards, down 0.7% and 0.5%, respectively. Other local currencies like the New Taiwanese dollar and rupiah in Indonesia also weakened.

Malaysia’s currency has declined 3.4% since the start of 2023, underperforming emerging Asian peers, as investors remained on guard against potential political instability, falling external demand, and the impact of slowing China growth.

Christopher Wong, FX Strategist at OCBC said the ringgit will take cues from the US dollar as he expects the greenback to enter consolidation in the lead-up to China’s central bank meeting later this month.

The US dollar index was mostly steady against other currencies at 99.955.

Last week, Federal Reserve Governor Christopher Waller said he expected two more quarter percentage point rate hikes this year to bring inflation down.

China’s economy grew 0.8% in April-June from the previous quarter, just beating market expectations, and raising pressure on policymakers to deliver more stimulus.

The People’s Bank of China also kept the interest rate unchanged on 103 billion yuan ($14.43 billion) worth of one-year medium-term lending facility (MLF) loans.

“To negate weak internal demand and eroding consumer confidence (in China), expansionary fiscal stimulus measures are likely to be more effective than more interest rate cuts,” said Kelvin Wong, senior market analyst, Asia Pacific, OANDA.

Mainland China shares led the falls in Asia, with Shanghai’s benchmark index sliding 1.1%.

Asian FX, equities up on easing rate rise bets, China stimulus hope

Indonesia recorded a large trade surplus of $3.46 billion in June, adding to the case for possible rate cuts before year-end. Shares in Jakarta added 0.4%.

Thailand stocks jumped 0.6%, while the baht tracked the falling yuan to drag 0.2%.

Thailand’s Move Forward party filed a motion in parliament on Friday seeking to curb the power of the military-appointed Senate as the country awaits a new leader of the government.

The Singapore dollar fell 0.1% after data showed the country’s non-oil domestic exports falling 15.5% for June, with shares dropping 0.3%.

Bracing for a typhoon, Hong Kong cancelled trading sessions for the day.